Simon Birmingham (SA, Liberal Party) Share this | Hansard source

I am pleased to rise to speak on the committee report of the inquiry into the Save Our Solar (Solar Rebate Protection) Bill 2008 [No. 2] and related matters. I am amazed to have heard Senator McEwen wanting to talk about certainty for the industry in regard to this inquiry. I am quite amazed because Senator McEwen knows all too well that this is an industry desperate for certainty, desperate for clarity, and it is finding absolutely none of it from the current government.

What was very clear through this inquiry was that the introduction of means testing came with absolutely no consultation with the industry beforehand. They had every belief, every high hope going into the budget this year, that the new Rudd government would, if anything, expand support for their industry. They believed quite strongly that the new Rudd government would actually deliver for the solar industry, because they had seen all the hype. They had heard all the noise. They had seen the now Prime Minister go and stand alongside solar operators just outside Canberra. They saw him actually stand beside Phil May at his business, Solartec, praise the industry and talk about the potential of the solar industry.

They had every reason to believe that the new government was going to be a friend of the industry, and yet instead what happened on 13 May this year with absolutely no hint, no consultation, nothing at all, was of course that the government—the government that had with much fanfare signed Kyoto, the government that had spent the entire election campaign talking about climate change at every opportunity—just suddenly introduced a means test on the solar panels rebate. It did so at a time when the industry itself was just starting to gain some confidence, was just really taking off. It did so at a time when the industry was looking forward to the future, having built strong capacity in that sector.

Having seen the rebate increase from $4 per watt to $8 per watt up to a maximum of $8,000 early in 2007, the industry had confidence in its future. It had confidence that the rebate was there to stay to meet demand, and it had that confidence because the coalition government had given a five-year commitment and appropriation to the rebate. It had confidence that the funds would be there because the then Prime Minister himself gave a public and personal commitment that, if demand outstripped the funds that had been allocated, more funds would be made available. That was the type of certainty the industry had enjoyed. It enjoyed the clear certainty of a five-year program, an $8,000 rebate with funding committed by the then Prime Minister.

Instead, we get the change of government. Despite all their rhetoric around climate change, they come in and pull the rug of certainty out from underneath the solar industry. They pull that rug of certainty out and leave the industry with a program radically diminished. It is radically diminished because they cut the length of the program from five years down to three years. It is radically diminished because they cut off at the knees the types of installations happening in this sector that were going to give it the capacity and strength it needed for the long term. By that I particularly mean the size of the installations that were occurring.

The most damning evidence we received during this inquiry came quite clearly from those who said that the size of solar systems being installed was now much smaller than had been the case previously. In fact, when the government officials finally appeared at this inquiry—and I will come back to the government’s approach to the inquiry in a moment—we saw evidence given that the size of the systems had reduced by more than 20 per cent. It is not that the government is actually giving smaller rebates—the government is still giving the maximum $8,000 rebate for each of these systems—but it is doing so and getting 20 per cent less renewable energy as a result. I would love to hear Mr Garrett try to tell us how it is a good policy outcome to spend $8,000 a pop to generate 20 per cent less renewable energy thanks to his policy of means testing. What he has done by introducing the means test is he has cut out all of those households who could actually afford to put in larger systems—households that were looking at putting in three-kilowatt or four-kilowatt systems, households that would have put in systems that would have met their own energy consumption and fed into the national grid. They have been cut out of the system as a result of this means testing.

Instead, we hear the government wanting to crow about the fact that applications have continued to increase. Yes, applications have continued to increase. They have increased for a number of reasons. One of those reasons is the surge in bulk purchase schemes of the smallest possible system. The Queensland government themselves introduced a bulk purchase scheme for 1,000 systems of one kilowatt in size—so the smallest system to get $8,000. We saw them introduce that scheme in a manner that has artificially propped up the number of applications for the smallest possible system. They are one-kilowatt systems that will not meet the energy demands of most of the households, certainly will not feed into the grid, and are a long way short of actually delivering the type of growth in renewable energy, the type of growth in capacity in the industry, that is needed. So one reason we see the surge in numbers is certainly this surge in bulk purchase schemes.

Another reason we see this surge in numbers is actually the very lack of that certainty that Senator McEwen was speaking of before, because the industry and consumers are concerned that, having seen a means test implemented, having cut off a large swathe of the population—all households with a gross income over $100,000—from being eligible for this rebate, people are understandably concerned that maybe the whole rebate will go sometime soon. Of course, as speculation mounts that that whole rebate could be cut off, people are getting in while they still can. They are getting the applications in. They are scared at the lack of certainty given by this government and so they are getting in and boosting those short-term applications.

There are also concerns because you are now dealing with a much smaller marketplace. We did not have one industry operator come to us and tell us that this was good policy—far from it; every industry operator who came to us came and said they thought this was a bad policy decision. They came and told us that they had lost sales as a result. Most told us that in fact they had not managed to sell a single photovoltaic system to a household which was over the means test threshold. So that entire section of the community has been cut off from purchasing systems because there is no incentive.

Many people came to us and said to us that they were happy to spend a little bit more on a system—that, indeed, if they had to dip into their pockets a little deeper, they would have done so. But for households who were looking at contributing between $5,000 and $15,000 of their own hard-earned towards buying a system, suddenly discovering that it was going to cost them an extra $8,000 on top of that was just too big a burden to bear. So it is little wonder that that sector of the population now are not purchasing systems.

There is a concern, with a rush in households under the threshold but no market in households over the threshold, about what is going to happen. Slowly but surely there is concern in the industry that that rush in the marketplace will dry up. Many people put it to us that the government had messed up its priorities on this—that it had confused what is an environmental objective with social policy objectives. As one witness put it to us quite clearly, ‘Carbon emissions are not means tested.’ Far from it. In fact, of course, a lot of those larger households with larger household incomes are emitting more—they are using more energy. So, far from it being that their emissions are means tested, it is quite the reverse. Yet the government for some reason wants to means test an environmental policy—and they did so in the crudest and bluntest of possible ways: a $100,000 household means test. (Time expired)